NBC walks away from iTunes

A pricing dispute could mean the end of "The Office," "30 Rock" and other popular shows on Apple's online store.

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After a dispute with Apple over the sales price of its TV shows, NBC Universal has decided not to renew its contract to offer its popular programs on the iTunes store. The shows — including “The Office,” “30 Rock,” and “Heroes” — will not disappear immediately from the store, and the two companies could pick up negotiations again before December, when the current contract expires. Failing that, though, some of your favorite shows may no longer be available on your iPod or iPhone.

Like the Universal Music Group, which walked away from an Apple contract this summer, NBC wants more freedom to adjust the sale price of its content than Apple will allow.

TV shows go for $1.99 an episode on iTunes. The network wants to be able to charge more — or, in some cases, less — depending on the show and episode, and it wants to be able to offer special deals. For instance, in an example put forward by the New York Times, NBC could sell a bundle of an episode of “The Office” along with a copy of “The 40-Year-Old Virgin,” both of which star Steve Carell, for a reduced price.

Apple’s CEO Steve Jobs has long argued that fluctuating prices would make people less likely to buy — $1.99 per episode for every episode is simple, straightforward, a price people have come to love.

Jobs is probably right. But here’s what I don’t get: What’s the harm in trying other prices? We all understand that prices vary with content; when you go into a real DVD store you find some TV shows on sale, some in the bargain bin, and some at premium. The differences don’t confuse anyone, do they? Why does Apple think people won’t tolerate that situation online?

Of course, both NBC Universal and Universal Music are breaking with Apple for more than prices. The larger issue here is control. Media companies are afraid of Apple’s expanding power over all forms of content, and the negotiating tactics are a way to forestall its rise.

Trouble is, as long as people keep buying iPods, they’re going to look to iTunes for their music and TV purchases. If they don’t find what they’re looking for there, I don’t guess they’ll go looking elsewhere for it. Walking away from Apple is, then, pretty much like walking away from customers.

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